WHAT’S NEW FOR TAX YEAR 2020August 2020Deborah Fox

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GENERAL INFORMATION TIN and Name Matching Requirement : Remember when filing informational re turns, the file r’s name and TIN (EIN) must match the name and TIN used on the file r’s taxable 94x series re turn or you may be subject to information re turn penalties.

Continuous Use: Some forms have been converted from annual updates to continuous use . These forms and instructions will be updated as required. More on this in a subsequent slide .

The due date for furnishing statements to recipients for Forms 1099-B, 1099-S, and 1099-MISC (if amounts are reported in box 8 or 10) is February 16, 2021. For a chart of dates, please refer to Due Date slide later in the deck.

Keep copies of information re turn or have the ability to reconstruct the data for at least 3 years. Keep copies of information re turns with imposed backup withholding for 4 years

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FORM CHANGES

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CONTINUOUS USE FORMSThe following forms and instructions have been converted from annual updates to continuous use .- Form 1097-BTC- Form 1098-C- Form 1098-F- Form 1098-MA- Form 1098-Q- Form 1099-CAP- Form 1099-LS- Form 1099-OID- Form 1099-LTC- Form 1099-Q- Form 1099-SA- Form 1099-SB

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TIN MASKINGRecipient SSN masking is allowed on all 1099 ’s and new this year , it is also allowed on e lectronically filed W-2 recipient copies.

– Note: some states may not allow TIN masking on the state copy. It is up to each individual state for the W-2.

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1099-MISC Due to the creation of Form 1099-NEC, the Form 1099-MISC has been rearranged and boxes renumbered.

Payer made direct sales of $5,000 or more (checkbox) in box 7.

Crop insurance proceeds reported in box 9

Gross proceeds to an attorney are reported in box 10.

Section 409A deferrals are reported in box 12.

Nonqualified deferred compensation income is reported in box 14.

Boxes 15, 16 and 17 report state taxes withheld, state identification number and amount of income earned in a state .

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1099-R

Use Code 1: to report a distribution of up to $5,000 for a qualified birth or adoption that is exempt from the 10% early distribution tax and that can be repaid.

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FORM 5498

Box 11: RMD required checkbox. Don ’t forget that RMDS were impacted by section 114 of the SECURE Act as well as CARES Act.

New repayment code has been added “BA” for reporting a repayment of a qualified birth or adoption distribution. (box 14a and 14b)

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FORM 1099-PATRNew boxes were added and existing boxes were renumbered, re titled, and/or repurposed to allow for reporting information to patrons needed for section 199A. (boxes 2, 5, 6, 7, 8, and 9)

Box 13 title and content change.

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FORM 1042-SBox 3b and 4b (tax rates): The revised backup withholding rate under section 3406 (24%) has been added to the Valid Tax Rate table .

Boxes 12b, 12c, 13f, 13g, 15b, 15c,16d, and 16e (Chapter 3 status code) :- The following codes have been dele ted: 01 (US Withholding agent), 02 (US Withholding agent –

other), 34 (US Withholding agent – fore ign branch of FI)- The following codes have been added: 36 (Fore ign Govt – Integral Part) and 37 (Fore ign Govt. –

Controlled Entity).- Code 19 has been updated from “Govt. or International Org.” to “International Organization”

Box 12f (country code): If the withholding agent is a US person or a fore ign branch of a US person, file rs are not permitted to enter “US” in box 12f even though US is not a code on the list.

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1099-NEC

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1099-NEC GENERAL INFORMATIONThe 1099-NEC is a new form for business taxpayers to report payments of nonemployee compensation.

Starting with tax year 2020, taxpayers must comple te this form to report any payment of $600 or more to a payee .

Generally, this form is due by January 31st but for 2020 tax re turns, the due date is Feb 1,2021.

There is no automatic extension for this form but may be available under certain hardships.

Nonemployee compensation may be subject to backup withholding if a payee has not provided a taxpayer identification number to the payer or the IRS notifies the payer that the TIN provided was incorrect.

More information about this form can be found at Form 1099-NEC, Nonemployee Compensation

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WHEN DO I NEED TO FILE A 1099-NEC?Use form 1099-NEC to report any payment you have made during the year of at least $600 when payments are made in the course of your trade or business:

1. Services performed by someone who is not your employee (including parts and materials)(box 1)2. Cash payments for fish or other aquatic life you purchase from anyone engaged in the trade or

business of catching fish (box 1)3. Payments to attorneys (box 1)

You must also use 1099-NEC to report any withholding of federal income tax (box 4) under the backup withholding rules regardless of the amount of payment.

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For information on this form, please refer to https://www.irs.gov/pub/irs-pdf/i1099msc.pdf

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W-2

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WHAT’S NEW ON THE W-2Truncation of SSN on employee copies of Form W2- Do not truncate on Copy A

- Do not truncate on paper filed W-2s.

- Civilian spouses of service members can e lect to use the same residence for purposes of taxation as the service member

- The only amounts to be reported in Box 12 under code P “Moving Expenses” are for re imbursements paid directly to a member of the US Armed Forces

- Penalties have increased due to inflation (50/110/280) based on how late the form is filed

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REPORTING SICK AND FAMILY LEAVE WAGES The Families First Act generally required employers with less than 500 employees to provide paid leave due to COVID-19 and/or sick leave under certain conditions.

Employers are required to report the amount of qualified sick and family leave wages paid to employees under sections 7001 or 7003 of the Families First Coronavirus Response Act (FFCRA) on Form W-2.

In addition to including qualified sick leave wages in boxes 1, 3 and 5 of the W-2, employers must report the following type and amount of wages that were paid separate ly on Form W-2, Box 14 or in a statement provided with the W-2. The description given for each entry must include language described by the IRS in Notice 2020-54

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DUE DATESForm Title To IRS To Recipient

1042-S Foreign Person’s US Source Incomesubject to withholding March 15 March 151098 Mortgage Interest Statement Feb. 28* Jan.311098-T Tuition Statement Feb. 28* Jan. 311099-B Proceeds from Broker and Barter Exchange Transactions Feb,28* Feb. 15 **1099-C Cancellation of Debt Feb. 28th Jan. 311099-DIV Dividends and Distributions Feb. 28 Jan. 31**1099-INT Interest Income Feb.28* Jan. 31**1099-MISC Miscellaneous income Feb. 28* Jan. 31** or Feb.15**

depending on type of income reported

1099-NEC NonEmployee compensation Jan.31 Jan. 311099-R Distributions from pensions/annuities/IRA/401K/….. Feb. 28* Jan. 311099-S Proceeds from real estate transactions Feb. 28* Feb. 15W-2 Income from wages Jan. 31 Jan. 31

*: March 31 if filed electronically**: March 15 for reporting by trustees and middlemen of WHFITs